Enrolled Agent Practice Exam
Questions Part 1 with 100% Correct
and Answers.
The following are true regarding the credit for prior-year minimum
tax, EXCEPT:
A) Individuals who pay AMT, Alternative Minimum Tax, may take a
credit against regular income tax in future years for only the portion
of the AMT that is attributable to deferral items, such as
depreciation.
B) The credit cannot reduce tax below the tentative minimum tax
for the year.
C) The credit is not refundable.
D) The credit may be carried forward for a period of 20 years. -
,,,,,answer,,,,,..D) The credit may be carried forward for a period of 20
years.
A taxpayer with AMT liability in the current year may recapture that
amount in future years in the form of a credit. This non-refundable
credit can offset future tax liability only to the extent prior AMT tax
paid was due to deferral items. The credit cannot reduce tax below
the tentative minimum tax for the year. You can carry over any
unused portion of the credit to future years (there is no 20-year
limit).
,Mary has an early withdrawal from her 401(k). If she changes her
mind within 60 days, which of the following plans can she use to
make a qualified rollover contribution?
A) Traditional IRA
B) Qualified annuity
C) SEP IRA
D) All of the above - ,,,,,answer,,,,,..D) All of the above
An eligible retirement plan , under section 402(c)(8)(B), means a
qualified plan or an individual retirement plan. The following
eligible retirement plans can accept a qualified rollover
contribution:
- a qualified plan described in section 401(a) which is exempt from
tax under section 501(a)
- an annuity plan described in section 403(a)
- an individual retirement account described in section 408(a)
- an individual retirement annuity (other than an endowment
contract) described in section 408(b)
The Net Investment Income Tax applies to certain net investment
income, which includes:
A) interest only
B) interest, dividends, and capital gains, increased by expenses
properly allocable to the income
C) 401(k) distributions
D) interest, dividends, capital gains, rental and royalty income,
reduced by expenses properly allocable to the income -
,,,,,answer,,,,,..D) interest, dividends, capital gains, rental and royalty
income, reduced by expenses properly allocable to the income
In general, investment income includes, but is not limited to interest,
dividends, capital gains, rental and royalty income, non-qualified
annuities, income from businesses involved in trading of financial
instruments or commodities, and businesses that are passive
activities to the taxpayer (within the meaning of Section 469). The
,taxpayer may reduce investment income by certain expenses
properly allocable to the income.
Net investment income does not include distributions from a
qualified retirement plan.
Kristin picked up some odd jobs over the holiday break and made
$385. This is her income for the entire year. Which of the following
statements is true?
A) She has to report the income as self-employment income.
B) She should file a 1040 SE because it is considered self-
employment income.
C) She should file a 1040 because it is considered regular income.
D) She does not need to report the income. - ,,,,,answer,,,,,..D) She
does not need to report the income.
You do not have to file an income tax return if your net earnings
from self-employment were less than $400.
Which of the following statements is correct with regard to the
payment of household employment taxes?
A) Household employment taxes are included on the employer's
individual income tax return and are due by April 15th of the
following year.
B) Household employment tax payments follow the same guidelines
as regular employment tax payments and tax deposits must be made
throughout the year.
C) Household employment tax payments must be made quarterly
with Form 941.
D) Household employment tax payments are not the employer's
responsibility. - ,,,,,answer,,,,,..A) Household employment taxes are
included on the employer's individual income tax return and are due
by April 15th of the following year.
Household employment taxes are included on the employer's
individual income tax return using Schedule H (Form 1040),
Household Employment Taxes, and are due by April 15. However,
, the employer may choose to include the wages with those of an
existing sole proprietorship or farming business.
For 2020, in which of the following situations would you be required
to report and pay social security and Medicare taxes?
A) You pay $2,500 cash to your 19-year-old daughter for babysitting
your 3 year old son.
B) You pay $5,500 cash to a 17-year-old who lives down the street
for cleaning your house.
C) You pay $2,300 cash to a 19-year-old who lives down the street
for lawn care.
D) You pay $7,500 cash to your mother for providing child care
services at mother's home. - ,,,,,answer,,,,,..C) You pay $2,300 cash to
a 19-year-old who lives down the street for lawn care.
You have a household employee if you hired someone to do
household work and that worker is your employee. The worker is
your employee if you can control not only what work is done, but
how it is done. If you pay cash wages of $2,200 or more (for 2020)
to any one household employee, then you need to report and pay
social security and Medicare taxes. Do not count wages you pay to
your spouse, your child under the age of 21, your parent (certain
exceptions apply), or any employee under the age of 18 at any time
during the year. If childcare services are provided outside of the
taxpayer's home, the childcare provider is not considered a
household employee.
Cash wages include wages you pay by cash, check, money order, etc.
Which of the following is income in respect of a decedent?
A) Cash received from a grandmother's estate.
B) Royalties received on the deceased father's published book; the
right to receive these royalties was distributed from the father's
estate.
C) Certificate of deposit received as a gift.
Questions Part 1 with 100% Correct
and Answers.
The following are true regarding the credit for prior-year minimum
tax, EXCEPT:
A) Individuals who pay AMT, Alternative Minimum Tax, may take a
credit against regular income tax in future years for only the portion
of the AMT that is attributable to deferral items, such as
depreciation.
B) The credit cannot reduce tax below the tentative minimum tax
for the year.
C) The credit is not refundable.
D) The credit may be carried forward for a period of 20 years. -
,,,,,answer,,,,,..D) The credit may be carried forward for a period of 20
years.
A taxpayer with AMT liability in the current year may recapture that
amount in future years in the form of a credit. This non-refundable
credit can offset future tax liability only to the extent prior AMT tax
paid was due to deferral items. The credit cannot reduce tax below
the tentative minimum tax for the year. You can carry over any
unused portion of the credit to future years (there is no 20-year
limit).
,Mary has an early withdrawal from her 401(k). If she changes her
mind within 60 days, which of the following plans can she use to
make a qualified rollover contribution?
A) Traditional IRA
B) Qualified annuity
C) SEP IRA
D) All of the above - ,,,,,answer,,,,,..D) All of the above
An eligible retirement plan , under section 402(c)(8)(B), means a
qualified plan or an individual retirement plan. The following
eligible retirement plans can accept a qualified rollover
contribution:
- a qualified plan described in section 401(a) which is exempt from
tax under section 501(a)
- an annuity plan described in section 403(a)
- an individual retirement account described in section 408(a)
- an individual retirement annuity (other than an endowment
contract) described in section 408(b)
The Net Investment Income Tax applies to certain net investment
income, which includes:
A) interest only
B) interest, dividends, and capital gains, increased by expenses
properly allocable to the income
C) 401(k) distributions
D) interest, dividends, capital gains, rental and royalty income,
reduced by expenses properly allocable to the income -
,,,,,answer,,,,,..D) interest, dividends, capital gains, rental and royalty
income, reduced by expenses properly allocable to the income
In general, investment income includes, but is not limited to interest,
dividends, capital gains, rental and royalty income, non-qualified
annuities, income from businesses involved in trading of financial
instruments or commodities, and businesses that are passive
activities to the taxpayer (within the meaning of Section 469). The
,taxpayer may reduce investment income by certain expenses
properly allocable to the income.
Net investment income does not include distributions from a
qualified retirement plan.
Kristin picked up some odd jobs over the holiday break and made
$385. This is her income for the entire year. Which of the following
statements is true?
A) She has to report the income as self-employment income.
B) She should file a 1040 SE because it is considered self-
employment income.
C) She should file a 1040 because it is considered regular income.
D) She does not need to report the income. - ,,,,,answer,,,,,..D) She
does not need to report the income.
You do not have to file an income tax return if your net earnings
from self-employment were less than $400.
Which of the following statements is correct with regard to the
payment of household employment taxes?
A) Household employment taxes are included on the employer's
individual income tax return and are due by April 15th of the
following year.
B) Household employment tax payments follow the same guidelines
as regular employment tax payments and tax deposits must be made
throughout the year.
C) Household employment tax payments must be made quarterly
with Form 941.
D) Household employment tax payments are not the employer's
responsibility. - ,,,,,answer,,,,,..A) Household employment taxes are
included on the employer's individual income tax return and are due
by April 15th of the following year.
Household employment taxes are included on the employer's
individual income tax return using Schedule H (Form 1040),
Household Employment Taxes, and are due by April 15. However,
, the employer may choose to include the wages with those of an
existing sole proprietorship or farming business.
For 2020, in which of the following situations would you be required
to report and pay social security and Medicare taxes?
A) You pay $2,500 cash to your 19-year-old daughter for babysitting
your 3 year old son.
B) You pay $5,500 cash to a 17-year-old who lives down the street
for cleaning your house.
C) You pay $2,300 cash to a 19-year-old who lives down the street
for lawn care.
D) You pay $7,500 cash to your mother for providing child care
services at mother's home. - ,,,,,answer,,,,,..C) You pay $2,300 cash to
a 19-year-old who lives down the street for lawn care.
You have a household employee if you hired someone to do
household work and that worker is your employee. The worker is
your employee if you can control not only what work is done, but
how it is done. If you pay cash wages of $2,200 or more (for 2020)
to any one household employee, then you need to report and pay
social security and Medicare taxes. Do not count wages you pay to
your spouse, your child under the age of 21, your parent (certain
exceptions apply), or any employee under the age of 18 at any time
during the year. If childcare services are provided outside of the
taxpayer's home, the childcare provider is not considered a
household employee.
Cash wages include wages you pay by cash, check, money order, etc.
Which of the following is income in respect of a decedent?
A) Cash received from a grandmother's estate.
B) Royalties received on the deceased father's published book; the
right to receive these royalties was distributed from the father's
estate.
C) Certificate of deposit received as a gift.
